This study develops a sectoral econometric forecasting model of business enterprise R&D inputs and tests the impact of public R&D financing on privately financed R&D. The main result is that public R&D financing does not crowd out privately financed R&D. This result is in line with the conclusions reached by previous Finnish econometric studies that have employed company-level data. The results of this study, based on sectoral time series data, indicate that the impact of public R&D financing on privately financed R&D is mainly neutral or possibly positive in some sectors of the economy.